The transcript from this week’s, MiB: Jim O’Shaughnessy on Infinite Knowledge, is under.
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That is Masters in enterprise with Barry Ritholtz on Bloomberg Radio
Barry Ritholtz: This week on the podcast. What a delight. Further particular visitor, Jim O’Shaughnessy, his guide that I got here to know him with first was, what Works on Wall Road, which has been only a perennial vendor. I believe it’s in its fourth or its sixth version, and actually influenced a number of generations of quants on finance. O’Shaughnessy Asset Administration, turned a pacesetter in direct indexing, ultimately was purchased by Franklin Templeton, main him to launch O’Shaughnessy Ventures, O’Shaughnessy Fellowships, infinite Loops podcast, simply so many various issues. His new guide is delightfully titled Two Ideas, A Timeless Assortment of Infinite Knowledge and displays most of the insights and, and simply thoughtfulness that Jim reveals in in the whole lot he does. I at all times discover it pleasant to have him on the present, and also you, you possibly can inform how a lot I respect him simply by the dialog meander wherever it goes. And I sometimes have a look at my listing of questions, however actually I simply wish to see the place Jim’s thoughts is gonna take it and are available alongside for the experience. I assumed this was pleasant, and I believe additionally, you will, with no additional ado, my dialog with Jim O’Shaughnessy
Jim O’Shaughnessy: Barry, I’m at all times trying ahead to those conversations. It’s nice to be again.
Barry Ritholtz: It, it’s, it’s a pleasure for me. Additionally, you and I am going method again,
Jim O’Shaughnessy: Approach, method again
Barry Ritholtz: It’s type of humorous, like 25 years later I used to be like, oh, how are you aware Jim? Oh, we met within the inexperienced room of television. Yeah. You understand, proper after the.com crash. It was type of, it was type of humorous. However let’s speak somewhat bit about all of the totally different companies and ventures that you just’re, you’re concerned with. So, I knew you proper across the time you had been on the brink of depart Bear Stearns. You had been at Bear Stearns for like a decade or so?
Jim O’Shaughnessy: No, about 5 and a half years.
Barry Ritholtz: So within the, within the mid two hundreds. And also you had the nice perception and enterprise acumen to faucet out of Bear Stearns in 2007 with all of these choices that you just had and train the choices, promote them and launch your shortness, the asset administration. So that you win on the best way out, you win on the best way into beginning the brand new agency. Inform us somewhat bit in regards to the early days leaving Bear Stearns and organising os a
Jim O’Shaughnessy: So, first, let me appropriate the EE Everybody assumes that I noticed the nice monetary disaster coming and subsequently needed to spin out of Bear Stearns. Take the win. Yeah. What, what do they are saying if the story conflicts with the legend Print? The legend. The legend actually isn’t appropriate, although. We had begun conversations with Bear Stearns people months and months earlier than the monetary disaster got here on the scene, and it was basically a really amicable partying. As you be aware, after we spun out, we saved all of our Bear Stearns accounts, continued to work with all their non-public shopper service individuals over there. So it was very, very amicable. However in fact, as a result of the nice monetary disaster got here alongside and Bear had these CDO funds that Yep. Had somewhat little bit of an issue. It was, it was simply, simply irresistible for information individuals to say, I, I had one reporter sit with me for an hour and a half, and all she saved doing was, come on, inform, inform me the reality. Inform me the reality. Inform me the reality. You understand,
Barry Ritholtz: It’s humorous ’trigger when, after we have a look at sure books that get the timing of issues proper or fully mistaken, individuals neglect a guide simply doesn’t seem wholesale out of skinny material. It’s the concept has to return alongside after which, then you definitely gotta get a writer that wishes it, except you’re gonna self-publish and also you gotta, then you definitely gotta write it in order that it’s like a one or two 12 months lag. I might think about pulling out a a considerable division from a significant brokerage agency doesn’t occur in a single day. No. It’s gotta be like a six or 12 month
Jim O’Shaughnessy: Course of. Completely. As a result of it’s a must to have everybody with the ORs moving into the identical course. You wanna guarantee that it’s agreeable and everyone seems to be, whether or not they’re sad that you just’re going, they’re pleased with the deal that allowed you to go. And so I took further time to guarantee that that occurred as a result of I liked the oldsters over at Bayer and it was actually simply my very own need to be an entrepreneur once more. And, and so they actually acquired that. And so very amicable, however as you as you realize, these issues take a very long time to get negotiated out. Yeah.
Barry Ritholtz: To me, the factor I’m, I used to be at all times type of unhappy about with the autumn of Bear Stearns ultimately picked up for pennies by Jamie Diamond and J JP Morgan Chase, after which even Lehman Brothers. I, I knew a variety of nice individuals in a variety of totally different divisions. You understand, all of us have mentors everywhere in the avenue that even when they’re a counterparty or, or in the event that they’re a salesman, there have been issues to be taught from people. And Bear and Lehman had been two like large storied names. And I imply, clearly there was an enormous disruption all through society, however the tragedy that a variety of of lay individuals don’t know are actually good individuals doing actually good work get they’re the collateral harm from another person’s screw
Jim O’Shaughnessy: Up. Completely agree. And the, you realize, clearly simply my private opinion, however I believe at that specific cut-off date, the entire funding banks had been bankrupt or bancrupt. And I believe, effectively,
Barry Ritholtz: Some had been somewhat extra bancrupt than others. Yeah,
Jim O’Shaughnessy: I agree. I agree. And, and so it was nearly a bit like luck of the draw that Lehman and Bear had been those to go down. Proper.
Barry Ritholtz: You understand, bear went down early sufficient that certainly it was salvageable. After which somewhat recognized story that lots of people are unaware of. Once I was writing Bailout Nation and doing my homework, it turned out that JP Morgan Chase had somewhat derivatives flare up like years earlier. And I don’t keep in mind if it was Jamie Dimon or one in all his lieutenants, however somebody stated, Hey, it is a mess and that is actually probably damaging. And it might need been Dimon who stated, promote all of it. I don’t care the worth. If it’s a must to take a ten or 20% haircut, I would like all this off the books. And that’s what they did. And so when the world went to hell, they had been, they picked up Washington Mutual, they picked up Bear Stearns. They, they acquired to cherry choose the perfect of the perfect at pennies on the greenback. And that’s why JP Morgan is the mon monster. It’s at present.
Jim O’Shaughnessy: Nicely, Jamie is an excellent sensible man, and that doesn’t shock me in any respect. You understand, the joke round Bear Stearns on the time was that Jamie actually, the true cause he needed to purchase a bear was he needed the constructing.
Barry Ritholtz: Which is now overshadowed by their model new headquarters on Park.
Jim O’Shaughnessy: Know. Park.
Barry Ritholtz: However that was an ideal octagonal constructing, which we might see out from our agency’s home windows on Bryant Park with the glass high
Jim O’Shaughnessy: It was, it was a gorgeous constructing. And, and also you stroll in and it’s like, you realize, the was Wall Road after which there was, you realize, the Morgan Stanley and Lehman Brothers kind of off of
Jim O’Shaughnessy: Midtown Sq..
Jim O’Shaughnessy: Yeah. Not my favourite half time Sq. 00:08:12 [Speaker Changed] Lehman was instances, instances Sq..
Barry Ritholtz: . Yeah. And, after which this was simply, all proper. So very prescient earlier than Vanderbilt was even a factor. That’s proper. And there they’re. Now one Vanderbilt is a monster. So, so let’s convey it again to, to what you might be doing. So you permit Bear, you launch os a m, you’ve already had nice success with what works on Wall Road. What made you suppose, I believe we’re gonna develop a sequence of quantitative approaches to managing cash.
Jim O’Shaughnessy: Wow. In order that was a dinner once I was a youngster. My grandfather had been very profitable. He was an oil speculator, and he type of beat the pledge guys by about 70 years. He proceeded to present away the huge portion of his fortune throughout his personal lifetime. Wa was it actually a fortune? It actually was. No kidding. And what he couldn’t give away, he put right into a basis, the ia O’Shaughnessy Basis, which I believe at present continues to be a few hundred million {dollars} basis. No kidding. And, however he made his 5 youngsters, the trustees. And so as soon as 1 / 4 there could be a dinner and it might rotate. I used to be introduced up in St. Paul. Proper. And so in the course of the St. Paul rotation, I acquired fortunate sufficient at, I believe I used to be 16, to get invited to the grownup desk. And naturally, like I, I’d need it to be an grownup and I liked going to my dad and mom’ cocktail events and speaking to adults.
And so I used to be actually excited and actually, I, I used to be put down subsequent to my Uncle John and my dad, and I’m listening, and so they’re speaking about IBM, however they’re simply speaking in regards to the CEO. They’re, they’re not speaking about how a lot do they make, how a lot do it’s a must to pay for each greenback of earnings or gross sales or ebitda? And, and I type of raised my hand and stated, dad, uncle John, don’t you suppose it could be a greater thought to have a look at it by the numbers? And so they dismissed me. That is 1976. Proper. So I made a decision what’s a quant? Yeah. Precise. Nicely, precisely. And so I made a decision, you realize what, I’m gonna go look into this. So I took myself right down to the James J. Hill Analysis Library in downtown St. Paul, and I assumed I used to be gonna be actually formidable, however I’m probably the world’s laziest man.
So once I noticed the five hundred of the s and p, the s and p tear sheet guide, I’m like, oh, I’m not, I’m not gonna have the ability to try this. So I align on the Dow 30 shares, 30 inventory. Proper, proper. Did the analysis discovered very compelling proof that what its PE is de facto issues to your returns going ahead. Very, very excessive. Valuations tended to crash and burn very, very low-cost valuations tended to do effectively. However in fact, you realize, Barry, I used to be 16, 17 way more desirous about ladies. Proper. And so after faculty acquired married younger, I used to be like, I’ve gotta revisit all this and acquired the info set from Compus stat and basically that turned what works on Wall Road. So, so wait, so what, what’d you examine in faculty? So, the rationale I’m an economics, I’ve a level in economics. The rationale for that was I had possibly six extra credit, 4 to 6 extra credit in economics than I had in historical past. So in any other case
Barry Ritholtz: You might need been a historian. Historian and never, not
Jim O’Shaughnessy: A Yeah, completely. Completely. Nicely, pay attention, I believe an excellent data of historical past is completely very important if you happen to wanna be an excellent investor, proper?
Barry Ritholtz:100%.
Jim O’Shaughnessy: I imply, like one of many, one of many Roman wits stated he who doesn’t perceive what occurred earlier than they had been born stays endlessly a toddler. Huh. And basically, I didn’t wanna stay a toddler. Should you look again on the market’s historical past, guess what? Historical past doesn’t repeat itself, nevertheless it rhymes for positive. I imply, you return to Isaac Newton dropping a fortune within the South Sea bubble, and like actually the, I at all times do that joke as a result of individuals get it. It’s like individuals had been so in love with that inventory poets wrote poetry about it. One went fill the South Sea goblet full, the gods shell of our shares, take care. Europa please accepts the bull. However JoVE with Pleasure places off the bear. And I used to, once I was nonetheless at O seven, I used to say, I’m completely a quant. But when any person writes a poem a few inventory you personal, promote it. That’s the highest
Barry Ritholtz: Proper. That’s a excessive that, that’s wonderful. And it’s humorous, you and I each have a love of quotations and also you, the the, I attempted repeatedly to trace down the supply of historical past. Doesn’t repeat, nevertheless it rhymes. It’s at all times attributed to Mark Twain or another person. And I’ve by no means been capable of actually confirm that on quote investigator. I really like that web site.
Jim O’Shaughnessy: Yeah. It’s fairly good. They will usually get you to the unique sighting of the textual content. What’s humorous about that although is nearly inevitably it’s any person you’ve completely by no means heard of. Proper? That’s proper. And I believe that’s why individuals like when that, that appears like one thing Mark Twain would say. Proper, proper. And however then there’s additionally the Mark Twain, Oscar Wilde. I imply, there’s a bunch of them. Like every quote that you just actually love and also you don’t know who did it, individuals are likely to say Mark Twain. Proper. Oscar Wild,
Barry Ritholtz: The one from Twain that stands out is, and I’m gonna mangle this, it’s not the issues we all know that get us into hassle, it’s the issues we all know for positive that simply ain’t present.
Jim O’Shaughnessy: Yeah. That was really a personality of Mark Twain’s. Oh, actually? And he, he spoke like a southerner of the late 19 a whole lot, and I believe his final identify was Ward. The character’s final identify was Ward Twain. I imply, he has a few of the nice precise quotes which might be actually his, what I really like is like, if you happen to choose up a canine on the street that’s ravenous and feed it, it’s going to love you. Should you do the identical for a human, it’s going to chew you. That is the precept distinction between a canine and a person
Barry Ritholtz: Which A is true. And B, results in the newer line. In order for you a pal on Wall Road, get a canine.
Barry Ritholtz: And it’s actually true. We’re gonna speak extra about quotes and books in a second. Earlier than we try this, I simply wanna convey up the primary guide, what Works on Wall Road. That guide not solely has been by means of a number of editions, it’s had legs, it’s influenced a complete technology or two of quants. What was probably the most shocking factor about what you discovered within the guide after which its subsequent reception in finance?
Jim O’Shaughnessy: So I believe probably the most shocking factor was quite a lot of individuals at varied companies that I used to be investigating working for earlier than beginning my very own. I imply, I had my very own firm, however I used to be getting a variety of presents primarily as a result of they knew the guide was coming. Proper. Lots of them, once they noticed the galleys of the guide, the manuscript, the very first thing they stated to me, Barry, was We’d love to rent you, however you can’t publish this guide. You’re giving it away.
Barry Ritholtz: I knew you had been gonna go there
Jim O’Shaughnessy: Precisely. And I used to be like, no, no, no, no, no. You, you possibly can have the best reality on the planet. You may scream it from all of the rooftops. You may take full web page advertisements within the Wall Road Journal. Most individuals are simply gonna go, meh. They’re not gonna do it.
Barry Ritholtz: It’s so true. You understand, the, my takeaway from my first guide, which is now 15 years in the past, was there could be these debates about what led to the disaster, what had been the elements, what had been, and I’m like, no, no, we, we’ve solved that. I, I’ve addressed that. Let’s, let’s transfer past that. And the arguments didn’t cease. Nope. Folks simply saved on debating it. And my takeaway was, oh, you may simply drop a reality bomb on individuals’s laps and in the event that they don’t wanna consider it, they’re not gonna consider it. And that was like, possibly I used to be naive, however you’re a hundred p.c proper. The truth that they thought you had been giving the key away. You can, you may, right here’s a secret to investing, not, possibly you’ll do okay with it, however no person’s gonna actually adapt. Nicely,
Jim O’Shaughnessy: You understand what’s humorous is I might say to those individuals, it was one of many, like once I began out and truly what works wasn’t my first guide, make investments Just like the Greatest was, which confirmed you Oh actually? Methods to clone your favourite cash managers. Proper. By trying on the greatest distinction between their portfolio issue distribution after which utilizing these as screens to get a portfolio, very like your supervisor. Proper. Observe we used to replace the clones versus the supervisor final time we did. It was years and years in the past. Proper. However the factor that I discovered actually attention-grabbing was the entire clones had been beating the managers that they cloned…
Barry Ritholtz: Was that ’reason for the price or was that, ’trigger they’re not nice sellers.
Jim O’Shaughnessy: It was due to our very human emotional resolution. Makings nearly at all times beneath excessive stress fashions don’t get confused. You understand, they don’t get hung over. They by no means combat with their partner. They only maintain making use of these standards. You’re in, you’re out. And I believe that the, you realize, we went by means of some robust instances after that guide got here out and, and other people have alternative ways of coping with stress and one in all ’em isn’t being good at promoting.
Barry Ritholtz: So there’s been quite a lot of research, and I don’t wanna discuss my guide, we’re gonna discuss your guide. However the some actually fascinating belongings you be taught are, once you have a look at the educational analysis fund supervisor, fund managers are literally surprisingly good patrons. Sure. However they’re horrible sellers. Yeah. And a part of the reason being, is the emotionality of the sale, they have an inclination to panic out once they shouldn’t or do the other. Maintain on. Proper. To the bitter finish once they actually shouldn’t
Jim O’Shaughnessy: Shouldn’t. Nicely, and in addition it’s simply because it’s simply a part of our human os a part of our human working system. Proper. I keep in mind when Enron was going by means of difficulties and I used to be set to talk with a basic supervisor. Proper. A basic man. And we had been gonna share the stage. And the primary query went to me and it was like, are you, do you personal Enron? And my reply was, no. The numbers are fairly unhealthy. And so we don’t, and he checked out me type of, you realize, with the chuckle, Ugh, you quants, you realize, after which he launched into this description of not solely did he maintain, he purchased extra after which he gave this as the reason. I went to a barbecue on the CFO’s home, the CEO was there, the CFO. And I seemed them within the eye and I stated, is there hassle? And so they assured me there wasn’t. And I’m simply kinda like sitting over there with, oh, okay, simply don’t contact this one. Proper.
Barry Ritholtz: Possibly we might get a brief placed on this that identical to, and I’ll let you know one thing that’s actually humorous, and this simply goes to how naive and silly I’m or particularly was early in my profession, I might pay attention to quarterly calls and I might consider each phrase I heard, just like the these guys aren’t gonna deceive their traders, the whole lot’s gonna be nice. And I in a short time discovered, oh you’re a horrible decide of, of individuals you’ll purchase something {that a} slick salesman is promoting you. You simply must cease. And I simply cease listening to calls ’trigger I’m an fool. I consider what they are saying. I might slightly have a look at the numbers and Yeah, I do know the numbers can lie, however not as simply as a CEO or CFO.
Jim O’Shaughnessy: You, that’s additionally a extremely massive a part of human os default to belief.
Barry Ritholtz: Nicely, we’re social primates
Jim O’Shaughnessy: Social being
Barry Ritholtz: Proper. Precisely.
Jim O’Shaughnessy: We’re domesticated primates and Yep. We grew up in teams the place belief was actually, actually essential. So your common human defaults to belief. And by the best way, that’s not a nasty default for the overwhelming majority of individuals. It most likely works higher to belief who you’re listening to. Proper, proper. And so one of many issues that we’re in one in all our divisions at O’Shaughnessy Ventures proper now could be voice software program AI that does stress evaluation on any sort of media. So clearly incomes calls current themselves as type of primary.
Barry Ritholtz: Actually.
Jim O’Shaughnessy: And I gotta let you know Barry,Wow. Thrilling stuff like,
Barry Ritholtz: Oh my God.
Jim O’Shaughnessy: Now how a lot of that’s nervousness about talking to a big viewers and nervousness? ’trigger they know one thing and so they don’t wish to
Jim O’Shaughnessy: Disclose it. In order you may guess, you do baselines. You are taking a recording the place clearly both, you realize, you get some tape that was earlier than the decision. Proper. Or you realize, a speech that had nothing to do with earnings and that creates your baseline. And then you definitely get to see very, in a short time like Spike. Wow, we don’t have any worries Spike.
Barry Ritholtz: Wow, that appears like enjoyable.
Jim O’Shaughnessy: Yeah, it’s enjoyable. And we we’re undecided how we’re gonna do it as a result of we don’t supply asset administration companies to individuals exterior of O’Shaugnessy Ventures. That was a deal that we made with Franklin Templeton that we’d not launch,
Barry Ritholtz: However you competitor, you may nonetheless perform a little come on. Doesn’t don’t you get the itch generally to say, Hey, X, Y, Z inventory is wildly overvalued and the CFO is stuffed with it. Let, let’s placed on some, let’s purchase some deep out of the cash places may and see the place this goes.
Jim O’Shaughnessy: Yeah. You understand, if you happen to maintain a secret Yeah. Secret. We would strive that with a few of our inner capital.
Barry Ritholtz: Let me know. I’m proper there with you. I really like the concept of that. The place did the title come
Jim O’Shaughnessy: From? So it got here from a gaggle of my teammates at OSV. Basically, I’ve been a quote junkie all of my life. Similar. So I’ve saved, I Barry have notebooks full of quotes.
Barry Ritholtz: Oh actually?
Jim O’Shaughnessy: From method again once I, I believe the primary time I began it, I used to be 21. And so I simply love them. And, and I believe that, you realize, they’ll pack a variety of a punch if you happen to if you happen to put ’em collectively. Proper. Should you curate them. Proper. Et cetera. Should you learn what works on Wall Road, I open each chapter with a fast, quote.
Barry Ritholtz: I try this so much additionally. I discover that’s enjoyable. Let me, let me ask you one different query in regards to the, the title. So one of many issues that’s fascinating, in case you are, if you happen to like music or poetry and even I’m gonna go into the weed, Shakespearean iic pentameter. I
Jim O’Shaughnessy: Love all these.
Barry Ritholtz: Okay. So there’s a rhythm to, and I’m gonna write this down so you realize, even when if you happen to get this, I would like you to know there’s a rhythm to the phrase, a timeless assortment of infinite knowledge that jogs my memory of one other guide title. And I’m curious if it was in your thoughts once you got here out with this.
Jim O’Shaughnessy: Oh, you bought me on that one.
Barry Ritholtz: “A heartbreaking work of staggering genius.” and “A timeless assortment of infinite knowledge.” It simply leaves off in that very same rhythm. I really like that connection. I don’t know if that was a coincidence..
Jim O’Shaughnessy: No. A minimum of it wasn’t in thet purposeful the again of thoughts actually, it wasn’t, wasn’t purposeful
Barry Ritholtz: As a result of I I’ve at all times liked that title. Oh,
Jim O’Shaughnessy: It’s an ideal title.
Barry Ritholtz: A heartbreaking work of staggering genius. And and it’s like, you may go together with a unique, it’s a staggering work of heartbreaking Gene. It’s a, like you may flip it round. Yeah. However this phrasing simply leapt that leapt proper out at me.
Jim O’Shaughnessy: I’m extremely fortunate to have in simply terribly gifted teammates, we’ve a variety of writers on the staff. We now have a variety of editors and, you realize, they might simply go at it like, what about this title? What about, as a result of we needed to name it two ideas as a result of this began Barry on a whim. Nicely,
Barry Ritholtz: I do know, I do know you’ve gotten been tweeting for, I don’t know, 10 years, not only a quote. And I used to be doing that for a very long time, simply throwing a quote up that I assumed was related. Generally I might stagger them out. Like, you possibly can plan a tweet six months prematurely. Hey, I don’t know what’s gonna be taking place in August, however I believe that is related. You could have been doing two tweets for endlessly.
Jim O’Shaughnessy: Yeah. And so we, it was type of like, you realize, Ken Stanley’s guide, greatness Can’t Be Deliberate. It is a good instance of that. So I simply thought, you realize, what the heck, I’m gonna put up two ideas and I’ll see if I prefer it. If I maintain doing it, I’ll simply maintain doing it. Proper. After which rapidly, just like the those that acquired interested in it had been, there was lots of people. After which I began getting dms on Twitter mainly saying, Hey, if you happen to would do that in a publication, I, I might subscribe. After which one in all my colleagues was like, effectively, let’s do the publication. And within the publication, why don’t we are saying, hey, would you want a guide? And that’s what occurred. Actually, we iterated, iterated, iterated and ended up publishing the guide.
Barry Ritholtz: Huh. In order that, that’s actually attention-grabbing that that’s the genesis of the 2 ideas. While you’re choosing a pair of ideas from the identical writer, are you searching for issues that go with one another? Are you searching for their, their most two most profound statements? How are you deciding on A and B for this writer?
Jim O’Shaughnessy: Yeah, it’s, it’s somewhat bit messy to be actually sincere, as a result of I’ll normally begin with the notebooks which have all my handwritten quotes out once I copied the quote over. And generally I’ll suppose, Ooh, I discovered like the right one quote from this writer, after which I’ll spend a while going by means of the remainder of their work, et cetera, discovering one that may praise it. However then generally a few of the greatest two quotes that work the perfect, they don’t praise one another. In different phrases, it’s kinda like, hey, you realize, historical past rhymes. However then the second quote is, however at all times maintain your eyes on the horizon. Proper? Like, hmm,
Barry Ritholtz: Two very totally different, two very issues
Jim O’Shaughnessy: Various things, various things. And so IIII, I wasn’t treasured about it in any respect, actually, as a result of it simply grew out of me throwing two quotes from the identical writer up on Twitter. And so, you realize, after the very fact individuals begin asking like, effectively, did you intend it that method? And the sincere to God reality is not any, I didn’t.
Barry Ritholtz: It was organically grew outta it organically. Hey, if you happen to do one thing, my expertise has been tacking into what works. Yeah. And you realize, it, it’s not fairly unsolicited mail
Jim O’Shaughnessy: Hey, we’re getting a response from this. However not that, it’s not precisely an AB take a look at, however hey, individuals appear to love this, let’s give them extra.
And, and that’s what occurred right here. You understand, like the most effective development elements in investing is momentum. And if you happen to see one thing gaining momentum, that is, it is a actually essential thought for me. I at all times hearken to the market as a result of if I’ve one opinion and the market has a unique opinion, I’m mistaken most likely more often than not. And so momentum on this regard, you see all of the dms rising. Hey, when are you gonna do the guide for this? Hey, the place’s the publication? Et cetera. And I’m like, okay, that is, that is actually rising from beneath, not from me saying, you realize what, I’m gonna do a two quotes guide and it’s gonna be nice. No, this was all others within the market saying to me, Hey Jim, do a two ideas guide
Barry Ritholtz: a grassroots groundswell. So, so let’s discuss understanding that you just’ve had all these quotes over the a long time. How did you start to consider organizing this? Simply quotes, we, we, this Bartlett’s guide of quotations and that’s alphabetical. Yeah. And you realize, that’s a analysis piece, however you’re placing this out as much less of an encyclopedia and extra of a nonfiction. How’d you consider the way you needed to construction it and set up it?
Jim O’Shaughnessy: We went forwards and backwards on that endlessly. After which we determined, okay, let’s, let’s separate it by broad groupings like thinkers, writers, authors, you realize, dy Dynamos, individuals who based corporations and had been extremely profitable. And we, within the hardcover of the guide, we made positive that every one was colour quote coded. As a result of actually the guide isn’t meant so that you can sit down and browse all of the quotes in it. Proper. It’s actually meant to have in your espresso desk, have in your desk and simply open it up randomly. It’s what I do. And simply learn the 2 quotes. ’trigger you’ll see two quotes on every web page and type of take into consideration them. And since individuals are, and by the best way, that’s the best way everybody I’ve ever talked to has a duplicate of the guide. That’s the best way they’re utilizing it. And, and so it was the type of the, you realize, lots of people do morning pages try this type of factor within the morning. They write and the quantity of people that’ve both emailed me, texted me or dmd me on Twitter saying, I completely love this for my morning writing. Proper. As a result of they’ll open it randomly. Proper. They’ll, they’ll ponder the quote, they’ll write it on the high of their, their morning writing. After which that’s what they discuss.
Barry Ritholtz: It evokes them. So based mostly on that, let me recommend we want a two quote a day desktop calendar the place you want, do you keep in mind these outdated ones? In fact I do. The place you simply pull, you realize, simply, it was nearly like a large pad of mine
Jim O’Shaughnessy: PostIt notes. Mine was a far facet calendar.
Barry Ritholtz: I used to be about to say that. I nonetheless have in my head, the College for the Gifted, the place he’s pushing on the, and the door says pull.
Jim O’Shaughnessy: I had that very same calendar Calendar. Precisely. Precisely.
Barry Ritholtz: I had a kind of and I had a Calvin and Hobbes and it’s only a totally different one daily. One other
Jim O’Shaughnessy: Considered one of my favorites
Barry Ritholtz: Ab completely. That’s so humorous. So let’s discuss what are actual quotes and, and what should not. And I’ve a really vivid recollection of placing a quote that supposedly was Thomas Jefferson in Bailout Nation. And like a 12 months after the guide was printed, I acquired an e mail from somebody saying they just like the boat, the guide PS that is an city legend. Thomas Jefferson by no means stated this. And that’s how I ended up ultimately monitoring down quote investigator. ’trigger I used to be so horrified. And one individual stated one thing, no person ever talked about it once more. Yeah. And it was like, all proper, so the excellent news is, the unhealthy information is what a screw up the excellent news is. No one seen. How did you go in regards to the strategy of validating and verifying that the quotes had been actual and real? It’s not simply Mark Twain, it’s Albert Einstein and George Carlin. Yeah. Oh yeah. Apparently stated all this stuff they by no means stated. Proper. Compounding is the eighth marvel of the world. World. Proper. Einstein by no means stated that.
00:32:56 [Speaker Changed] Yeah, no, I do know. So there I used to be very fortunate to have a really diligent staff and so they recognized a number of sources. We used quote investigator, however we used others as effectively to attempt to get the veracity of the writer and the quote. Proper. Now, having stated that, I’m positive that there are nonetheless some examples in there the place we acquired it mistaken. Proper. And so we even put somewhat factor in there saying, you realize, all errors, Hey, we did our greatest. Yeah. All, all errors are our personal. Proper. However philosophically, I’ve somewhat little bit of a unique view of this. I I believe that all of us too usually, as a result of we, we anthropomorphize issues to the extent the place if Albert Einstein stated this proper then it’s essential. I, I invert that and I say, it doesn’t matter who stated this, let’s stick with the compounding because the eighth marvel of the world. Proper. You understand what you and I do know that’s true.
Barry Ritholtz: It really is true. Proper.
00:34:02 [Speaker Changed] We all know that’s true. And so what’s extra essential, that concept moving into any person’s head or that Barry rid Holtz or Jim O’Shaughnessy really stated that to me, it doesn’t actually matter. Now I’m not making an attempt to diss the individuals who wanna be actual, they need to be that you just wanna be correct and also you, you wanna be correct. Completely appropriate. However with me, it’s at all times extra like I’m fascinated by the thought or the message that’s being communicated. That’s what I would like individuals to deal with. Now, clearly, we wish it to be attributed to the best individual. You understand, Banksy had a extremely humorous quote. I, I don’t suppose we put it within the guide, however I put it up on Twitter so much and it’s, any type of philosophical assertion sounds higher if you happen to put the identify of a useless well-known thinker after it. And he put Plato after which, after which waved beneath it. He wrote No Banksy. And so I assumed that was actually humorous. However you realize, that’s most likely what’s really taking place, proper? It’s like, hmm, I would like individuals to essentially take this critically. Proper, proper. So I’m gonna guarantee that Einstein stated this doesn’t, in order that doesn’t, you realize, it doesn’t add to what the, what the thought is inspiring in you.
Barry Ritholtz: ] You understand, that type of jogs my memory of the Abe Lincoln line. Don’t consider the whole lot you learn on the web. Proper. However let me, let me invert the query. In your analysis course of, did you discover a quote that you just knew and liked and thought, oh, that is nice and it suits this individual so effectively, after which subsequently you uncover, oh, it wasn’t by that individual. Sure. Any, any come to thoughts?
Jim O’Shaughnessy: Nicely, we had fairly a couple of really, Eleanor Roosevelt quotes that weren’t Eleanor Roosevelt actually. And we had a variety of, effectively, not going again over the plain ones. Einstein, you realize, Twain, Carlin Twain, George Carlin, Oscar Wilde, et cetera. And if we love the quote, we’d put it in beneath the precise writer’s identify. And I can’t, I can’t consider one which’s nice proper now the place we did that. But it surely’s actually humorous too, as a result of the response, we did this, we did a take a look at, we, on our firm Slack, I put the identical quote after we discovered one in all these, and it was initially attributed to Eleanor Roosevelt. And it really ended up being a girl who was a pal of hers and infrequently within the White Home, however who nobody had ever heard of, no less than no up to date individual had ever heard of. So I, I put ’em each up on our firm Slack. And I stated, what do you guys consider the primary one? Numerous emojis and the whole lot. After which I put it up with the opposite girl’s identify,
Barry Ritholtz: The much less well-known, the writer, crickets.
Jim O’Shaughnessy: precise writer, crickets. And so to me, there’s clearly one thing being activated in our mind that claims, Ooh, should be essential. Proper. ’trigger Eleanor Roosevelt or Albert Einstein stated it. And I at all times strive myself to be impartial on that. I at all times attempt to deal with what’s being stated, not who’s saying it.
00:37:26 [Speaker Changed] And, and to provide the behavioral finance spin on that, that’s the halo impact. You’re giving credit score to an individual for achievement in a single space, and also you’re permitting that to spill over to the quote whether or not or not they stated it or not. Precisely. It’s not fairly social proof, however hey, if it’s Oscar Wilde or Mark Twain, we all know they had been wordsmiths and good. And hey, in the event that they stated it, it should be
00:37:52 [Speaker Changed] Beneficial. It should be good.
00:37:53 [Speaker Changed] Proper. Or, or, and I ponder if that’s why individuals, you realize, attribute factor to, to George Carlin and to say nothing of of Einstein. So, so that you co-wrote this guide. Inform us somewhat bit about your co-author, Vatsal Kasic. How did you guys deal with the, the workload? Did you, was he extra organizational and also you extra philosophical? I do know you’re deep down inside a thinker. Te inform us, how did you go about placing the work collectively?
00:38:22 [Speaker Changed] So Vatsal was the primary worker of Infinite Loops, my podcast. And he’s an incredible man. He’s multi-talented, he’s an ideal builder of tech. However he additionally reads extensively. And it was really Vasel who got here to me and stated, okay Jim, you’ve acquired all these guys and girls texting you saying we wish a guide. He goes, let’s do the guide. And so what he dealt with was nearly completely the vetting, the method of constructing positive who I had attributed the quote to was appropriate. However then he additionally did a little bit of curating. You understand, he determined with finally my approval, you realize, we don’t suppose this group actually goes in there. We’d a lot favor this group. So he was very instrumental on the precise curation of the quotes the place I used to be, as you say, way more philosophical. If there was one which I completely liked and he simply wasn’t discovering, discovering a spot to suit it in, then I might say, effectively strive tougher.
00:39:39 [Speaker Changed] Alright. So, so I do know, I do know there are specific authors you actually respect, however I’m curious what thinkers, what philosophers, what books discovered their method into the gestalt of this guide? What, what actually influenced your strategy to this?
00:39:59 [Speaker Changed] So it was not essentially as a result of trace, there’ll most likely be one other model of this guide popping out. It might be 10
00:40:08 [Speaker Changed] Extra variations of
00:40:09 [Speaker Changed] This guide, proper? So some I held in abeyance as a result of I actually needed them to enter the second guide. However, you realize, I love vastly the entire age of enlightenment authors and thinkers. You understand, your Adam Smith’s, your, you realize, all of the, the individuals who had been like, wait a tick, we, we might really do issues that we would name the scientific technique and actually take a look at all of our beliefs a lot to the chagrin of the ruling church buildings of the time interval. And so, Voltaire at all times massive, massive fan of his work. And you realize, however I, I didn’t go at it from that vantage level, what I actually needed to do due to the character of the guide. In different phrases, I by no means anticipated anybody to take a seat and go from the entrance web page to the final web page. Proper. If I had, I might’ve achieved it otherwise then I might’ve tried to inform a narrative, an total story with the quotes, one thing we would really strive with the, one of many subsequent variations of the guide. However with this one, since I knew I needed it to be type of a leaping off level for individuals to get an thought to consider it, I simply was very a lot not, you realize, I’m not gonna make it apparent and I’m not gonna observe them in sequential order or you realize, this group all are collectively and absent from different locations within the guide. So yeah, I imply like, you’ll get an excellent thought for a few of my favourite thinkers by simply who I’m doing quotes by.
00:41:56 [Speaker Changed] Why a guide, why not another media? You’re so, you realize, digital ahead and have been for a very long time. I, I at all times discover I like bodily books, however you realize, you and I are from a earlier technology, the whole lot appears to be shifting in a unique course.
00:42:15 [Speaker Changed] It’s. However primary, like if you happen to have a look at Ojay Ventures, it’s the whole lot that I really like, like Infinite Books, the writer, infinite movie, I really like motion pictures, the Fellowships, which you realize all about. Positive. However I believe that it’s not simply individuals of our technology who like stunning books. Actually, the individuals who had been probably the most enthusiastic about it had been youthful individuals. Oh actually? ’trigger we took quite a lot of care to make it stunning. And we had the printer from Italy do the printing and it’s acquired colour and the backbone isn’t glued. So the variety of youthful individuals, and once I say youthful, anybody most likely beneath 35, the notes that I might get saying, that is probably the most stunning artifact. And I heard that time period greater than as soon as. Artifact. Artifact. So there, so one was a pal, and so I referred to as him and I’m like, why are you calling this an artifact?
00:43:23 And he goes, as a result of I’m starting to have a look at these hardcover books as artworks. Proper, proper. And, and in order that was shocking to me. However I really like, I really like books. You understand, I I I’ve massive libraries at my home. What I principally, by the best way, Barry learn on Kindle for iPad. Actually? But when I really like a guide, I at all times purchase the exhausting copy. And if I actually love a guide, I purchase the exhausting copy for my library and three paperbacks to present to associates. Huh. And, and so one of many issues, it’s kinda like vinyl, proper? We grew up on vinyl, that’s how we made our combined tapes, the whole lot else, proper? However guess what, a variety of younger individuals are going again and sampling vinyl. So I assume that everybody appears to love it.
00:44:14 [Speaker Changed] There’s there’s a sure tactile Yeah. Really feel I I used to like the Me too all of the album artwork. Oh. Which not solely do you not get with the identical method with small CDs, however once you transfer to streaming, you don’t even know the names of half the songs on an album. ’trigger it simply all type of comes by means of at
00:44:35 [Speaker Changed] As soon as. It’s a unique expertise.
00:44:36 [Speaker Changed] Yeah, very a lot so. So let’s speak somewhat bit about each O’Shaughnessy Ventures and os a, I kind of have a look at them as a part of a continuum in your, in your profession. You let your son Patrick take over as CEO of, of Shawnessy Asset Administration. He was a key driver of Canvas, which was constructed on high of a database that you just’ve been refining for the reason that Nineties is and do I’ve that proper?
00:45:06 [Speaker Changed] Yeah, yeah. And truly you may keep in mind I began the primary on-line funding advisor referred to as Web Folio. That’s proper. In 1999, 2000. I used to be simply, you realize, 23 years too early. And I additionally made the error of constructing a B2C, whereas that’s supposed, that was a, an enormous mistake ought to have gone B2B as a result of I later discovered, you realize, I used to be a degree taking part in area man and like individuals couldn’t simply purchase their no hundreds and the whole lot. However the extra the info introduced itself to me, the extra I came to visit to the facet the place advisors are incomes each greenback, you pay them. Proper? As a result of the outcomes, the outcomes had been simply so significantly better. So we began constructing the instruments that turned Canvas in the course of the nice monetary disaster. I’m like, okay, we’re most likely not gonna promote one other lengthy solely US inventory portfolio for the subsequent three years. So let’s actually assault the info.
00:46:10 Let’s clear it. By the best way, actually hate it by my analysis staff for that complete interval. Proper. As a result of it’s actually mind-numbing genius. Yeah. Dangerous. However by the best way, now that’s an ideal use case for ai. It might do it a lot sooner. It might do it, you realize, you, you possibly can free your employees to not have to try this laborious mind-numbingly boring sort of labor in order that they’ll work on higher analysis, extra attention-grabbing matters. However yeah, and as we had been doing it, and Patrick walked into my workplace and he’s like, you realize, dad, we, he really did say this to me and I do know it turned Lore, however he goes, we constructed the Demise Star to kill a mouse right here. And I’m like, what do you imply? He goes, effectively, our, our purchasers, the, the Riol Wealth Managements of the world might, might use this and it might be wonderful for his or her enterprise. Now clearly, as a result of I had already tried with Web Folio, I used to be like, let’s do it. So yeah, constructing out the precise know-how although, that was a multi-year effort. It took us a very long time.
00:47:27 [Speaker Changed] What, what, you realize, I you, our mutual pal Dave Ick has been a supporter of direct indexing and ETFs clearly for a very long time. And my complaints had been at all times Yeah, nevertheless it’s Klugy. Yeah. However I get these 200 web page, you realize, quarterly appointments and it’s not very wonderful tuneable. And, and I’ll always remember when BATNA got here again to the workplace having seen a demo, he, he, if he had hair, it might’ve been on hearth. Like that’s what it was. That’s what it was. Like. He was leaping up and down and simply the demo is like, oh wow, that is slick. And wow, this actually appears good. I can’t consider it’s that definable. It’s that person. And just like the deeper you went into it, it was simply each step alongside the best way, there was a ton of stuff. What was the imaginative and prescient once you initially had been constructing this? Was it, Hey, let’s pump this up and promote it, as a result of I do know you guys by no means had been actually purchasing this round. Yeah, no. Form of fell out of the blue.
00:48:31 [Speaker Changed] Yeah, no, we, we, it was to not pump it up and promote it in any respect. It was, we needed to have the best possible software program for the best way we managed cash. And there was actually nothing off the shelf that suited our wants. And so we placed on a reasonably important developer staff that had background in portfolio administration. That is key. The issue with only a technologist making an attempt to return into our trade and construct a platform like this, they don’t know the entire junk that goes on beneath we do. Proper. As a result of that’s what we do. Proper? They, they don’t take into consideration, effectively who’s the clearance agent, who’s the custodian, all of these kinds of issues. So by really having individuals very, very, with very deep area data in asset administration and the best way it actually works, that was an enormous assist in us constructing out the software program. However the authentic factor Barry, was we needed to serve you our purchasers higher and sooner. After which after we noticed that the customization that the tax administration, that each one of that may be actually interesting to not solely our advisors however to our advisors purchasers. That’s when it clicked. Wow. Like type of our AWS second was, huh, we expect different individuals may actually like this too.
00:50:02 [Speaker Changed] No, abso completely. The, the tax facet of it was a recreation changer. And once I was performing some current analysis for an additional undertaking, I simply began going by means of the listing of trillion greenback asset managers that both purchased or constructed a direct indexer. And once you see 10 or 20 of the biggest companies on the planet all shifting in the identical course, Hey, listen.
00:50:25 [Speaker Changed] One thing’s occurring in area, area, customization is the long run. Yeah. We’re completely, we’re leaving one measurement suits all. And the power to customise your shopper’s portfolio right down to their particular wants is re it truly is a recreation changer. Particularly on the like tax alpha you could generate.
00:50:48 [Speaker Changed] So that you talked about you had been AI earlier, I do know you’ve been appointed chairman of the board at Stability ai.
00:50:55 [Speaker Changed] I used to be.
00:50:56 [Speaker Changed] Oh, in order that’s not, so let me rephrase that query. So that you talked about AI earlier. How do you see AI remodeling both the funding administration trade or enterprise capital? What’s the position of AI gonna be going ahead?
00:51:12 [Speaker Changed] I I really consider that AI is probably the most highly effective know-how that has ever come on the scene throughout my profession. Wow. And it’s going to be used primarily for changing arduous, boring, mind-numbing sort actions that people are at present doing. The AI can do, let me provide you with an instance. In our writer, if you happen to work with a legacy writer, you’re achieved together with your manuscript, you ship it in, you most likely had this expertise.
00:51:48 [Speaker Changed] Typos, typos. Typos,
00:51:49 [Speaker Changed] Proper? Typos, typos, typos. But it surely didn’t get again to you most likely for a few months, proper? With Infinite Books, it’ll most likely get again to you the subsequent day actually, as a result of we’ve an AI that takes all of these typos, fixes them, it prints it in galley format as a result of non auths may not consider this, however an writer, once they see their work in the best way it’s gonna look as a guide, it type of freaks you out. You, you begin studying it otherwise. Very a lot so. And so we’ll have that, that can return to the writer. All of the typos shall be gone and any incongruity within the manuscript shall be famous. We gained’t contact it as a result of we wanna depart it to the writer to make no matter adjustments they need. But when it says, Hey Barry, in chapter one you stated this, however in chapter 4 you stated the precise reverse factor, which one would you like? After which lastly we’re, we’ve plagiarism routines the place, you realize, one million little items the place it’s a must to go on and get scolded by Oprah, effectively ought to by no means occur once more. As a result of generally individuals aren’t plagiarizing deliberately. They’re possibly doing it from reminiscence, one thing they learn, et cetera. And wouldn’t it’s much better for everybody involved if you happen to simply convey that to the writer’s consideration and so they can repair it.
00:53:15 [Speaker Changed] So you’ve gotten a variety of curiosity. So it’s not simply enterprise investing, it’s ai, it’s publishing, it’s fellowships the place you discover any person who you sponsor for a 12 months and you realize, kind of a MacArthur GR genius grant. The place are you able to go, what are you able to do with this? You understand, the place do you actually focus your effort and time? What most pursuits you?
00:53:41 [Speaker Changed] So I’m gonna cop out and provide the reply. All of it pursuits me, Barry, or I wouldn’t have it true, however I’m very fortunate in that we’ve a senior individual on the head of every one in all these verticals. And so I allow them to, I’m, I’m very massive on hiring individuals with tremendous excessive company and who’re actually, actually vibrant, principally brighter than me. And I allow them to run with what they wanna do. They at all times maintain me knowledgeable as to, hey, we could be making an attempt this massive change. After which I log off there. However I imply, mainly the verticals had been all areas that I liked. I liked motion pictures, I really like books, I really like media, I really like podcasts, et cetera. And so they had been additionally areas the place I felt that there was a variety of arbitrage alternative obtainable. As an example, like most legacy publishers are working beneath greatest ideas, however they’re working beneath the perfect ideas from 1925, not 2025.
00:54:48 And so there’s a lot that may be improved within the course of to make the writer an excellent deal. Happier to make the studying public have entry to their authors work prior to they could in any other case. But in addition due to the know-how, we’re capable of supply a significantly better deal to our authors. Our authors usually will take 70% of the royalties Wow. After the prices have been cleared. So we will nonetheless make quite a lot of cash on the 30% that we keep. However there’s additionally cross pollenization, proper? There’s an ideal podcaster who’s gonna be an ideal writer, there’s a nice writer who could be an ideal podcaster, or we’ll do the entire thing for them. We’ll set ’em up on a substack, we’ll give them a podcast, we’ll publish their guide. What we actually wanna deal with is concepts that ended up in slush piles in days of your, a variety of nice writing is there. And so we wish to have the ability to not solely see that, however publish the perfect of it.
00:56:03 [Speaker Changed] So that you’re publishing books, you’re internet hosting your individual podcast, infinite Loops. I’m type of intrigued by the concept of investing in motion pictures, which are typically a black gap of losses. You understand, it’s like eating places, performs and movies.
00:56:23 [Speaker Changed] Inform
00:56:24 [Speaker Changed] Us what you’re doing
00:56:25 [Speaker Changed] Cinematically. So cinematically we began, I, our, our little mantra is crawl, stroll, run. And so, you realize, it, it was odd for me as a result of, you realize, I had a really established popularity and asset administration. And right here I’m the full underdog. I I, I imply like we’re the insurgent alliance, if you’ll, going up in opposition to some very, very robust rivals. So on the movie facet, we began with documentaries. Considered one of our first flip facet really premiered on the Toronto Movie Pageant. Acquired wonderful evaluations, acquired purchased out by a distributor. And in order that went very, very effectively. We at the moment are commissioning documentaries with some youthful expertise that isn’t actually certain up by the best way Hollywood at present does issues. And by that that means somewhat
00:57:21 [Speaker Changed] Extra nimble, gentle,
00:57:22 [Speaker Changed] Quick, responsive, way more nimble, a lot sooner, way more responsive. Somebody
00:57:28 [Speaker Changed] Had shot a movie on an iPhone kind of as somewhat little bit of a publicity stunt on, I wanna say, eight or 10 years in the past. However that’s actually very possible at present, isn’t
00:57:40 [Speaker Changed] It? Oh, completely. And once you add in the entire issues that Ai, I discussed the entire laborious stuff that you just do away with with publishing, identical is true in movie. So that is gonna sound bizarre, however you realize what eats up like large quantities of time and is ridiculously boring colour matching actually. When, when issues are filmed over a wide range of days or places or what have you ever, sooner or later is cloudy, sooner or later is sunny. You’ve acquired to have that matchup in order that your movie seems of a bit.
00:58:16 [Speaker Changed] So it’s extra than simply continuity.
00:58:19 [Speaker Changed] Completely. It’s, it’s the subsequent step past that. It’s the subsequent step past that. And there’s simply a lot that may be achieved with, with the visible half, with the modifying ais that we’ve at all times gonna have a human editor. However we’re giving them instruments that simply makes them capable of do their job in a, a way more inventive method. As a result of they don’t must take that hour or two hour and, and do the ly, oh I’ve gotta transfer this to right here and that to their, they actually can press a button and it occurs. So what we’re discovering is a superb quantity of the workflows in these industries are time consuming, boring, and identical to they take endlessly. And we will repair that to the purpose the place they not take endlessly. And the individuals we’re working with completely like it as a result of they’ll spend their time making that edit like Supreme, proper? We’re giving them again time that they’ll use artistically.
00:59:30 [Speaker Changed] So, so many individuals have been pessimistic about ai, it’s gonna kill jobs, it’s going to wreck society. You gained’t know what to, to do, to consider, to belief we’ll all be outta work. I don’t get the sense that you just’re AI that method. You appear to suppose that this, or it appears like you might be discovering that is simply an unimaginable useful gizmo and it’s gonna make all of us extra productive and extra
00:59:57 [Speaker Changed] Artistic. Exactly. You understand, we at all times get frightened when some new know-how comes on the scene. And by the best way, this goes again endlessly. Like when
01:00:06 [Speaker Changed] The Ludite proper,
01:00:07 [Speaker Changed] The Luddites proper? It goes again to Ned Lud and, and who broke up all of the machines? ’trigger they had been gonna take their jobs whereas he ended up engaged on a kind of looms and he vastly most popular his new job as a result of he didn’t must do it the outdated horrible method. Similar factor’s gonna occur right here, nevertheless it occurs on a regular basis, proper? So when information first got here out, you realize, that symphony orchestras took full web page advertisements in newspapers saying that isn’t actual music, actual music is reside and it’s a must to hear it reside otherwise you’re listening to a counterfeit, proper? So when this kind of advance comes alongside, you at all times axio magically, individuals get freaked out. I believe, you realize, AI isn’t gonna take your job a human being utilizing the AI instruments will as a result of they’ll be a lot more adept at what they’re doing.
01:01:05 They’re gonna have a lot extra time to deal with the actually excessive worth stuff and never have to fret with all of the stuff that, you realize, they needed to do up to now. However now we will automate it by means of AI workflows. So a i I subscribe to what they name the C mannequin. You keep in mind the Legendary Beast? Positive. Half horse, half man. That’s what’s gonna occur with ai. It’s going to be AI plus human being. That’s the place all the nice stuff is gonna come. Proper now we’re gonna see a tsunami of slop that’s gonna be simply AI generated and other people will suppose, oh, that’s ok. Proper? And so going ahead you possibly can create an enormous edge by having good style and curating it effectively, proper? Proper. However I can assure you nearly all of that’s going to be human utilizing AI as a device to make their jobs higher, simpler, extra inventive. The best way I have a look at it’s, you realize, Steve Jobs famously stated, computer systems had been bicycles in your thoughts, AI is a rocket ship in your thoughts.
01:02:18 [Speaker Changed] Huh? I I like the best way you you phrase that. You understand, somebody as soon as requested me, you realize, what’s the key to placing out the every day reads? And my reply was, curate viciously.
01:02:30 [Speaker Changed] Precisely. And
01:02:31 [Speaker Changed] You, you realize, ai, I don’t suppose in our lifetime and possibly not our youngsters’ lifetime is gonna attain the purpose the place it may be a style maker.
01:02:40 [Speaker Changed] We consider, passionately consider that you probably have good style and you’re a nice curator, your future appears unimaginable
01:02:50 [Speaker Changed] Actually.
01:02:50 [Speaker Changed] ’trigger you’ll have the ability to use these instruments. You gained’t must spend on a regular basis that you just used to. And that’s gonna even make, it’s gonna be the rocket ship to present you, get you to the subsequent degree of your good style and curation.
01:03:03 [Speaker Changed] So a pair extra questions earlier than we get to our ultimate query. And that’s, first I’ve to ask you in regards to the O’Shaughnessy Fellowship. What, what I’ve been calling your MacArthur award. Inform us a somewhat bit in regards to the assist you supply for younger entrepreneurs. What impressed you to begin this program? I do know we’ve had no less than one Oh Shaughnessy Fellowship individual, Kyle Scanlan as a visitor on the present. Possibly one different, I’ll must undergo the listing and, and see what, what motivated you to create this program and, and the way has it been working?
01:03:43 [Speaker Changed] So it’s working actually, rather well. We now have the purposes, we’re now in our third 12 months, the purposes are way more quite a few and the standard of the applicant, I imply, Barry actually, if I might, I I might give most of them them fellowships, proper? However the, the true cause that I did it was as a result of I had change into satisfied that geography, time and area have all collapsed. And within the outdated days, you realize, you and I might know one another nonetheless as a result of we each reside right here in New York and we each are in the identical enterprise. However apart from that, like previous to the web, previous to what I name the human colossus, we couldn’t discover these geniuses elsewhere. We are able to now. And I consider that it’s completely crucial to point out the world that there are a ton of good individuals on this world, a lot of them younger, who don’t have a chance to exhibit what they’ve to supply to the world.
01:04:51 Now we will discover and extra importantly, fund them. And the best way we do it’s, it’s completely no strings funding. So if you happen to’re a fellow, you get 100 thousand {dollars} over a one 12 months interval to work in your undertaking. Should you’re a grantee, you get 10,000. We now have clearly many extra grantees than we’ve fellows, however simply the blossoming of the best way the teams work collectively, like, I assumed that it might take us no less than 5 years to construct like a extremely cool community of tremendous sensible switched on individuals. It’s already occurred. We now have, we’ve gr we’ve in-person conferences every year. And the final one we had, I’ll simply provide you with a fast instance. We, we’ve a scientist who’s creating an in-home option to take a look at your child’s poop to guarantee that it’s okay. She had no thought find out how to market this.
01:05:50 One other fellow was sitting proper subsequent to her. He’s a author, he’s a thinker, and he is aware of all about this. And actually he, over the course of an hour and a half, he gave her a totally totally different advertising and marketing plan that she adored. She came to visit to me and he or she stated, I can’t consider that in an hour and a half, he completely modified the best way I’m gonna convey this to market. Huh. So the, the cross pollinization and the synthesis of those nice minds is known as a factor to behold. I, I’m simply very, very enthusiastic about what’s popping out.
01:06:27 [Speaker Changed] And, and earlier than we get to our favourite questions, I wanna throw you a curve ball.
01:06:32 [Speaker Changed] Curve ball.
01:06:33 [Speaker Changed] So, since we first met again in A-C-N-B-C Inexperienced Room within the early two hundreds, so a couple of a long time in the past, you’ve had a reasonably distinctive perch on the world of finance and investing and asset administration. How has monetary media and asset administration modified over the course of your profession?
01:06:58 [Speaker Changed] Nicely, in the beginning of my profession, type of squawk field on CNBC was the gold customary and the format they used at the moment, I used to co-host with Mark Haynes all
01:07:11 [Speaker Changed] The time. Positive. I’ve achieved that a couple of instances.
01:07:13 [Speaker Changed] Again then, it was a 3 hour program through which the portfolio supervisor or the strategists that we had been speaking to was given like 20 minutes
01:07:24 [Speaker Changed] I recall to
01:07:25 [Speaker Changed] Really articulate their thesis about why they had been bullish or bearish, why they appreciated this specific group or that specific group. So one of many issues that I noticed taking place when that modified was we weren’t giving the viewers like that type of therapy, which is known as a actually unimaginable therapy. It was a 3 hour interval that gave you sufficient time to truly speak issues out. Now what’s occurred, podcasts like yours clearly have come alongside and also you’ve changed that side. And so, you realize, I might bemoan once I noticed that taking place with Squawk, particularly, oh, I might actually want that they may return to the outdated format. However then you definitely and plenty of, many different, my son with recommendation, like
01:08:17 [Speaker Changed] The perfect proper. Patchy Completely.
01:08:18 [Speaker Changed] Got here in and stuffed the void. So I believe what traders are capable of get entry to now could be simply, it dwarfs are the early days once you and I met in that inexperienced room. They’ve so many podcasts they, they’ll select from. They will, they’ll nonetheless watch monetary media, then there’s the YouTube individuals, proper? However like the whole lot, you’ve gotta aggressively curate any person such as you, you realize, you’re method up right here and also you’re type of the gold customary. But it surely, what number of reveals have you ever achieved? You’ve, you’ve gotten proof of labor?
01:08:54 [Speaker Changed] I’ll, I’ll let you know a joke. So we’re July shall be 11 years. It’s 550 reveals. The origin story, I don’t know if I ever instructed this by myself podcast. I’m fairly positive I’ve instructed it elsewhere. It’s getting back from a convention in Vancouver, Canada. And I needed to both change planes in Chicago or Montreal. I don’t keep in mind coming again to New York. And I, I’m within the lounge and I wanna say it was CNBC and so they had been interviewing Invoice Ackman. I might be mistaken, possibly it was Einhorn, I don’t keep in mind. But it surely was a fund supervisor like that, who again then was not, there’s no Twitter, they weren’t doing a variety of television. They’re like, you actually don’t go on TV except you had been advertising and marketing or had a extremely good quarter. And I simply keep in mind listening to the worst, prefer it was a 5 minute hit, not a 20 minute hit.
01:09:54 That’s proper. And when you’ve gotten 5 minutes, it’s what’s your favourite shares when the fed’s gonna minimize? The place’s the Dow gonna be subsequent 12 months? Thanks for coming by. And the second that man walks out of the constructing, these solutions are stale. Completely. And so, so I used to be flying again after you modified planes, I bumped right into a pal and I used to be type of like grinding my enamel. And he’s like, what, what’s in your thoughts? You appear to be you’re irritated. And I relate the story. And he stated, what questions would you ask? And the questions we’re about to ask, I’m about to ask you. These had been a few of the questions. Who’re you? How’d you get that method? What are you studying? Who’re your mentors? How did you develop your philosophy? Should you had been giving me recommendation as a university grad, what would you inform me if I needed to go like simply off the highest of my head? Positive. Simply because I needed the individual to have to make use of the phrase you used earlier company and management over the story, but additionally categorical what they’ve discovered over the a long time. Precisely. And 30 seconds doesn’t, doesn’t provide you with that. So on that be aware, let, let’s bounce to our pace rounds. All proper. And do our, our favourite questions that we ask all of our company. I believe that is most likely the third or fourth time I’ve had you do these.
01:11:12 [Speaker Changed] I hope I don’t give the identical
01:11:13 [Speaker Changed] Solutions. So, hey, pay attention, we’ll have AI undergo it and learn how your, how your pondering has developed.
01:11:18 [Speaker Changed] Let’s describe that. There we go. I really like that. Proper?
01:11:20 [Speaker Changed] So beginning with what’s holding you entertained today? What are you watching or listening to?
01:11:26 [Speaker Changed] So principally listening to the conventional group of podcasts that you’d, yours, my son’s by myself. However do you discover
01:11:38 [Speaker Changed] Listening to your individual is a problem in that it sucks up time you could’t hearken to others otherwise you don’t wanna hearken to any person you’re going to interview and also you don’t need another person’s questions
01:11:50 [Speaker Changed] In your head. So, so, so my soiled little secret is that I very, very seldom hearken to my very own. I do learn the transcripts, proper. Simply to ensure, Ooh, I actually screwed that up. I gotta repair that.
01:12:03 [Speaker Changed] Transcripts don’t come throughout the identical method as Yeah. Know.
01:12:05 [Speaker Changed] I do know, I do know. However I, I favor to present my lively listening time to love your podcast and, and Patrick’s when it comes to studying. I proceed to learn very, very broadly. My favourite kind of literary fiction writer is David Mitchell, who wrote Cloud Atlas. Oh actually? And I’ve began studying Made
01:12:27 [Speaker Changed] Right into a film.
01:12:27 [Speaker Changed] Proper? Yeah. Yeah. The guide’s significantly better than the 01:12:29 [Speaker Changed] Film. Another person stated that. Yeah.
01:12:32 [Speaker Changed] And I really like Howard Bloom’s work. You understand, the, he’s 01:12:36 [Speaker Changed] Closing of American Minds.
01:12:38 [Speaker Changed] No, no totally different man. Appears like, proper, proper. However Howard is a really enjoyable, eccentric genius who’s kind of began life as a scientist and now takes all of what he discovered there and applies it to the social world or the enterprise
01:12:53 [Speaker Changed] World. Closing of the American Thoughts, or entertaining ourselves to
01:12:56 [Speaker Changed] Demise. No, no, no. Considered one of his could be the Lucifer Precept. Oh, actually? About how all of our evolutionary issues which might be driving a variety of our actions have profound implications for markets, for societies, for all of this stuff. And like, he’s acquired an ideal guide, taming Re-Imagining the Beast, the place he talks about capitalism. Huh. Saying, Hey, capitalism is arms down the winner, however we will nonetheless enhance it and we must always enhance it. And right here’s how I believe we must always. So love his work, learn just about any paper I can get my arms on, having to do with advances in AI and, and that kind of factor. For enjoyable, I simply noticed the brand new Bob Dylan film Beloved it. And
01:13:50 [Speaker Changed] An entire unknown.
01:13:51 [Speaker Changed] An entire unknown. And I additionally liked the best way Timothy Chalamet the lead in that. Yep. I liked his speech when he acquired up and stated, you realize what? I might say, ah, shucks, and I’m nothing, however I wanna let you know one thing. I’m aspiring to nice this, I wanna be nice. And I really like really seeing the youthful technology begin saying issues like that as a result of it’s so, for therefore usually, you realize, we, we, you realize, oh, wasn’t actually something. Come on. False
01:14:23 [Speaker Changed] Humility.
01:14:23 [Speaker Changed] It’s false humility. It’s simply, it’s like 01:14:25 [Speaker Changed] It stands out,
01:14:26 [Speaker Changed] Doesn’t it? Proper.
01:14:27 [Speaker Changed] It jars once you hear it, jars come
01:14:29 [Speaker Changed] On. It’s once you hear it, and it’s like, once I heard him give that speech, I’m like, proper on. That’s what I really like listening to from a younger actor or a author or no matter. I, hey, I aspire to this.
01:14:41 [Speaker Changed] Don’t all of us aspire to greatness or least? So I believe, shouldn’t we, we must always. Such as you acquired one chew of the apple, you get one run, make it, make it value
01:14:49 [Speaker Changed] One thing. Make it worthwhile. Yeah. And so I used to be very pleased to see that once more, only for whole enjoyable. I really like Billy Bob Thornton. So we actually loved Landman.
01:15:01 [Speaker Changed] You understand, you’re just like the third or fourth one that instructed me how a lot they love that sequence. It, it
01:15:05 [Speaker Changed] Is a lot, it’s simply enjoyable. And, and so that you’re most likely not gonna be taught so much by watching it. Apart from that Billy Bob Thornton chews up each scene that he seems in. He’s such an excellent actor.
01:15:18 [Speaker Changed] All the time is. Each time I see him in one thing, 01:15:20 [Speaker Changed] Me, me
01:15:21 [Speaker Changed] Too. He’s, he’s a delight. You understand, you’ve gotten such an attention-grabbing background. I’m curious if you happen to had any mentors assist form your profession?
01:15:31 [Speaker Changed] I did. I had a gentleman who was, once I was very, very younger, I’m not gonna point out his identify as a result of a few of his youngsters could be listening, however we’ll go together with Jim. He was additionally a Jim and he most likely did extra for me once I was younger and full of, you realize, vinegar and, and really definitive beliefs. And I’ll let you know all I’m gonna proselytize that is the best way to do it. And he was actually, actually good at saying, Jim, you may wish to take {that a} step again as a result of what do you actually need? Nicely, I would like individuals to learn about this. Okay. However what’s the broader implication right here? Course of over final result. Okay. Nicely why don’t you speak somewhat bit extra about that. Why don’t you discuss the best way that individuals can really take what you’re saying to them and make them helpful in their very own life. So he, he was an incredible mentor to me as a result of he was very affected person, depraved humorousness, and at all times good at reminding me that you just may wanna take it again a notch or two.
01:16:45 [Speaker Changed] That’s nice. Let’s, you talked about a couple of books. Another favorites you wanna point out earlier than we get to our favourite questions?
01:16:53 [Speaker Changed] The, the what? Let me reference our infinite books. We now have a, a listing you could get anyplace. It’s, you possibly can go to Twitter, you possibly can go to our substack, and it’s type of our seminal books, you realize, books like The Starting of Infinity by David Deutsch, I believe is a masterpiece starting
01:17:12 [Speaker Changed] Of Infinity.
01:17:13 [Speaker Changed] Infinity by David Deutsch, who’s a quantum physicist within the uk. I really like all of his work, however I additionally suppose individuals must be studying issues just like the, my Perennially learn the Do de Jing by lasu packs a Wall Up Man as a result of you possibly can learn the entire thing in an hour. Proper. However I used to joke, you realize, I began studying that once I was 18 and I learn it yearly, generally a number of instances yearly. And I lastly began to know it once I was about 55. Proper.
01:17:44 [Speaker Changed] I used to be gonna say, it’s a unique guide every time you learn it.
01:17:46 [Speaker Changed] It truly is. It’s like Haitis, you realize, no man steps in the identical river twice as a result of it’s not the identical man and it’s not the identical river.
01:17:56 [Speaker Changed] Completely. All proper. Our ultimate two questions that we ask all of our company. What kind of recommendation would you give to a current faculty grad desirous about a profession in both investing quantitative analytics or enterprise capital?
01:18:12 [Speaker Changed] Perceive the leverage that you just get from the entire new AI instruments. It offers you many benefits. The older individuals on these desks may not be quickly adopting use of these instruments. And if you happen to stroll right into a job interview with some mastery of them, what they’re doing when it comes to what they’ll uncover for like vc, for conventional, lengthy solely, or lengthy brief administration is staggering. Get a deep area data there because it suits into your specific ardour, be it investing or evaluation, et cetera. However that may be my primary piece of recommendation. Wow.
01:19:05 [Speaker Changed] And our ultimate query. What are you aware in regards to the world of investing at present that may’ve been useful again within the Nineties once you had been first beginning out?
01:19:15 [Speaker Changed] Folks don’t change. Markets change. And once I actually, actually got here to know that was after really the nice monetary disaster. I went by means of the crash in 1987. I went by means of the opposite bear markets, however I didn’t actually lock in on the truth that markets change millisecond by millisecond human habits. Barely budges, millennia by millennia arbitraging human nature is the ultimate moat.
01:19:55 [Speaker Changed] Arbitraging human nature is the ultimate moat. That’s unbelievable place to finish it. Jim, thanks a lot for being so beneficiant together with your time and for being simply such an ideal colleague, mentor, supply of knowledge. Prefer it’s been my privilege to know you my entire profession. I, I keep in mind, I wanna say it was just like the late two hundreds sitting at an outside in a Starbucks. Yeah. In I keep in mind it Nicely, I keep in mind it. Nicely, hey, don’t we all know one another? Sure. And it was, it was identical to a kind of small world moments and also you’ve at all times been simply so considerate, so in inspiring and your insights, simply, I do know so many individuals you’ve had such a optimistic affect on it. It’s only a delight and a pleasure to know you. Nicely, proper again at you Barry. I, it’s been my nice pleasure understanding you all of those years. So, so this mutual admiration society has to return to an finish. It’s a bro, it’s a bromance.
01:21:03 We now have been talking with Jim O’Shaughnessy, founder and CEO of O’Shaughnessy Ventures. Should you take pleasure in this dialog, effectively try any of the five hundred earlier ones we’ve had over the previous 10, nearly 11 years. You will discover these at iTunes, Spotify, YouTube, Bloomberg, or wherever you discover your favourite podcast. Make certain and take a look at my new guide, how To not Make investments the Dangerous Concepts, numbers, and Behaviors That Destroy Wealth Coming wherever you get your favourite books. On March 18th, 2025. I might be remiss if I didn’t thank the crack staff that helps put these conversations collectively. Anna Luke is my producer, Meredith Frank is my audio engineer. Sage Bauman is the top of podcasts at Bloomberg. Sean Russo is my researcher. I’m Barry Riol. You’ve been listening to Masters in Enterprise on Bloomberg Radio.
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